 "With Tiago, Tata Motors hits sweet spot")
Riding high on the success of the Tiago hatchback, Tata Motors came close to regaining the number three spot in November this year. Had that happened, it would have overtaken long-time rival Mahindra & Mahindra.
In fact, never has the company managed to generate so much interest in any car since 2009 when it launched the Nano. The world’s cheapest car drew a lot of interest when bookings opened that year and many people were even willing to pay a little extra to get the car delivered in time.
The Tiago single-handedly makes up nearly 50% of Tata Motors’ monthly volumes. Since its launch in April, the small car, which competes with Maruti Suzuki Alto, Hyundai Eon, Datsun Redi Go and Renault Kwid on price, has seen a sustained growth in volumes even in the face of the ongoing demonetisation drive.
Tata Motors closed the gap between itself and Mahindra & Mahindra to 304 units in November from 3,424 units five months ago. To be sure, the rise in volumes at Tata Motors coincides with a dramatic fall in volumes for M&M, the market leader in sports utility vehicles, during the same month.
Mayank Pareek, president (passenger vehicle business unit), Tata Motors, says, “The Tiago got us new type of customers. About 83% of the Tiago customers never owned a Tata car earlier. So we won them over from other brands. Among them, first-time car owners would be 45-50%.”
Creating a space for itself
The Tiago is promoted by Argentine soccer player Lionel Messi and is positioned in a white space in the affordable passenger car category. Except for upgraded (1,000cc engine) versions of existing cars, the segment has not had any new product for a long time in that price range.
Maruti Suzuki’s Alto, which dominates the entry-segment, is smaller in size and comes with dated design and styling. In comparison, the Tiago not only offers a more stylish exterior and interior, but also a more powerful engine and a host of other features at a competitive price. At Rs 3.2 lakh, the Tiago costs less than the Alto, which is priced at Rs 3.3 lakh (ex-showroom, Delhi).
“Generally people talk of the first mover advantage. We took a late mover advantage. The idea was to have a distinct proposition when you are late to the party. Late can’t be ‘me-too’ products. If you see, many products launched in other segments were ‘me-too’ products and none of them have done well,” adds Pareek.
Which is why the Kwid, Renault’s compact hatchback, also became a huge hit. Competing against the Alto, the Kwid offers unorthodox styling with its tall SUV-like stance and modern looks. The demand for the French car is such that even after 19 months since its launch, the company is finding it difficult to keep pace with it.
A slew of new products
Tata Motors believes the kind of momentum that the Tiago has gathered is exactly the kind it has been waiting for. The company is preparing itself to launch more products into the market to cater to ‘in-demand’ segments as well as boldly create new segments which are unexplored.
“If you see the overall market, 50% is hatchback, 20% is sedan, 25% is sports utility vehicles and 5% is vans. Not many people realise this but we are present in only 65% of the market. We are not there in some of the large growth segments. So going forward, one of our important jobs is to fill these gaps,” adds Pareek.
Though the hatchback segment generates half the total volumes of the industry, it is the bigger hatchback segment comprising 20% of the volumes that is reporting high growth. Models like Maruti Suzuki Baleno, Hyundai i20 dominate this space followed by Volkswagen’s Polo. Tata Motors wants to make a product infusion in this segment.
“Our vision is that by 2019 we will be number three. And this would be riding on our very strong pipeline of future products. Which has two strategies; one is filing up the gaps and the other is entry into new emerging segments,” Pareek adds.
Tata Motors will launch three new products (premium SUV, compact sedan and compact SUV) while a fourth one will be a variant of the Tiago over the next 18 months. The Hexa, a premium SUV, is due for launch in mid-January.
“There are some sweet spots which we can fill in anticipation. We don’t have to wait for everybody to come and launch a car,” says Pareek .
With the Hexa, Tata Motors will be trying its luck in the premium category once again despite losing badly twice earlier. The Safari and Aria, both priced above Rs 10 lakh, have been a big disappointment for the company.
The Hexa will be priced above Rs 10 lakh and mainly compete against Toyota’s Innova Crysta, Mahindra’s XUV500, Ford Endeavour.
“My experience is that if the product meets or even exceeds customer expectations then they will buy it irrespective of where the product is coming from. We have to make sure that whatever product we launch, be it the Hexa or anything else, it has to be a cut above the rest,” says Pareek.
Shaking off the old image
Yet along with forging a new path, Tata Motors also needs to overcome legacy issues. The company still has more than half a dozen age-old products that face an uncertain future. The Indica, the Aria, the Venture, the Nano and the Winger have all become a drag on its portfolio.
Over the past four years, five multinational car companies have launched over 50 new products in India as against only two new products, the Bolt and the Zest, by Tata Motors. That is why Tata Motors is eager to replace these aging products with new ones to bring back lost consumers.
At the same time, it wants to sharpen focus on after-sales service. Tata Motors completely overhauled its sales and service network before the launch of the Tiago.
“It is not just the ‘product’, but it is ‘product plus’ that sells. In a category like automotive, it is the service which decides sales. We realised we needed to improve our after-market service and that’s what we did,” adds Pareek.
This change led to a significant leap in Tata Motors’ ranking in the JD Power Customer Service Index Study this year. Tata Motors was ranked third jointly with Hyundai while Honda and Maruti Suzuki shared the top position. Tata Motors was ranked seventh in 2011.
In fact, never has the company managed to generate so much interest in any car since 2009 when it launched the Nano. The world’s cheapest car drew a lot of interest when bookings opened that year and many people were even willing to pay a little extra to get the car delivered in time.
The Tiago single-handedly makes up nearly 50% of Tata Motors’ monthly volumes. Since its launch in April, the small car, which competes with Maruti Suzuki Alto, Hyundai Eon, Datsun Redi Go and Renault Kwid on price, has seen a sustained growth in volumes even in the face of the ongoing demonetisation drive.
Tata Motors closed the gap between itself and Mahindra & Mahindra to 304 units in November from 3,424 units five months ago. To be sure, the rise in volumes at Tata Motors coincides with a dramatic fall in volumes for M&M, the market leader in sports utility vehicles, during the same month.
Mayank Pareek, president (passenger vehicle business unit), Tata Motors, says, “The Tiago got us new type of customers. About 83% of the Tiago customers never owned a Tata car earlier. So we won them over from other brands. Among them, first-time car owners would be 45-50%.”
Creating a space for itself
The Tiago is promoted by Argentine soccer player Lionel Messi and is positioned in a white space in the affordable passenger car category. Except for upgraded (1,000cc engine) versions of existing cars, the segment has not had any new product for a long time in that price range.
Maruti Suzuki’s Alto, which dominates the entry-segment, is smaller in size and comes with dated design and styling. In comparison, the Tiago not only offers a more stylish exterior and interior, but also a more powerful engine and a host of other features at a competitive price. At Rs 3.2 lakh, the Tiago costs less than the Alto, which is priced at Rs 3.3 lakh (ex-showroom, Delhi).
“Generally people talk of the first mover advantage. We took a late mover advantage. The idea was to have a distinct proposition when you are late to the party. Late can’t be ‘me-too’ products. If you see, many products launched in other segments were ‘me-too’ products and none of them have done well,” adds Pareek.
Which is why the Kwid, Renault’s compact hatchback, also became a huge hit. Competing against the Alto, the Kwid offers unorthodox styling with its tall SUV-like stance and modern looks. The demand for the French car is such that even after 19 months since its launch, the company is finding it difficult to keep pace with it.
A slew of new products
Tata Motors believes the kind of momentum that the Tiago has gathered is exactly the kind it has been waiting for. The company is preparing itself to launch more products into the market to cater to ‘in-demand’ segments as well as boldly create new segments which are unexplored.
“If you see the overall market, 50% is hatchback, 20% is sedan, 25% is sports utility vehicles and 5% is vans. Not many people realise this but we are present in only 65% of the market. We are not there in some of the large growth segments. So going forward, one of our important jobs is to fill these gaps,” adds Pareek.
Though the hatchback segment generates half the total volumes of the industry, it is the bigger hatchback segment comprising 20% of the volumes that is reporting high growth. Models like Maruti Suzuki Baleno, Hyundai i20 dominate this space followed by Volkswagen’s Polo. Tata Motors wants to make a product infusion in this segment.
Closing the gap
At the same time, it is also planning to launch cars in the above four-meter sedan category and the compact sports utility vehicle space; the compact SUV space accounts for 50% of the total utility vehicle volumes.“Our vision is that by 2019 we will be number three. And this would be riding on our very strong pipeline of future products. Which has two strategies; one is filing up the gaps and the other is entry into new emerging segments,” Pareek adds.
Tata Motors will launch three new products (premium SUV, compact sedan and compact SUV) while a fourth one will be a variant of the Tiago over the next 18 months. The Hexa, a premium SUV, is due for launch in mid-January.
“There are some sweet spots which we can fill in anticipation. We don’t have to wait for everybody to come and launch a car,” says Pareek .
With the Hexa, Tata Motors will be trying its luck in the premium category once again despite losing badly twice earlier. The Safari and Aria, both priced above Rs 10 lakh, have been a big disappointment for the company.
The Hexa will be priced above Rs 10 lakh and mainly compete against Toyota’s Innova Crysta, Mahindra’s XUV500, Ford Endeavour.
“My experience is that if the product meets or even exceeds customer expectations then they will buy it irrespective of where the product is coming from. We have to make sure that whatever product we launch, be it the Hexa or anything else, it has to be a cut above the rest,” says Pareek.
Shaking off the old image
Yet along with forging a new path, Tata Motors also needs to overcome legacy issues. The company still has more than half a dozen age-old products that face an uncertain future. The Indica, the Aria, the Venture, the Nano and the Winger have all become a drag on its portfolio.
Over the past four years, five multinational car companies have launched over 50 new products in India as against only two new products, the Bolt and the Zest, by Tata Motors. That is why Tata Motors is eager to replace these aging products with new ones to bring back lost consumers.
At the same time, it wants to sharpen focus on after-sales service. Tata Motors completely overhauled its sales and service network before the launch of the Tiago.
“It is not just the ‘product’, but it is ‘product plus’ that sells. In a category like automotive, it is the service which decides sales. We realised we needed to improve our after-market service and that’s what we did,” adds Pareek.
This change led to a significant leap in Tata Motors’ ranking in the JD Power Customer Service Index Study this year. Tata Motors was ranked third jointly with Hyundai while Honda and Maruti Suzuki shared the top position. Tata Motors was ranked seventh in 2011.